Pernod to boost Speyside production as profits climb

PERNOD Ricard has unveiled plans to ramp up its Speyside whisky production, including the reopening of the mothballed Braeval distillery, after toasting an 18 per cent rise in first-half profits.

The group, which ranks as Scotland's second-biggest whisky producer – behind Diageo – following the 2006 acquisition of Allied Domecq, said the expansion plans had been driven by soaring demand for its premium whisky brands.

Plans for the expansion of the Glenlivet distillery are to be submitted to Moray Council. Pernod hopes to install a new mash tun, six new stills and eight new "washbacks" to accommodate increased production.

It is due to reopen the Braeval plant, near Tomintoul, in July. First opened by Chivas Brothers – Pernod's Scotch and premium gin business – in 1973, the distillery has lain dormant for the past six years.

Chivas chief executive Christian Porta said: "Demand for Scotch whisky is at a record high. This latest investment will enable us to meet our growing demand as well as demonstrate our commitment to developing our business in Scotland."

Pernod has seen its growth fuelled by strong sales in new markets such as Asia and Russia. It believes it can also ride out an economic slowdown in the US and western Europe.

Managing director Pierre Pringuet said the overall economic environment remained "very positive".

"In the United States, there is a slight slowdown which is not preventing our brands such as Jameson (Irish whiskey], Glenlivet and our wines from continuing to grow and rapidly," he said, adding that Europe was "not doing too badly".

Pernod, with whisky brands such as Ballantine's, Aberlour and Strathisla, also produces Martell cognac, Jacob's Creek wine and Mumm champagne.

Net profits rose to 588 million (426m) in the six months to 31 December, up from 500m a year earlier. No breakdown of brands was provided.

Chief executive Patrick Ricard said: "The increase in profit was such that we decided to accelerate the growth in advertising and marketing expenditure, thus strengthening our growth prospects."

The group raised its full-year forecast for the third time in four months, saying it now expected growth in like-for-like operating profit from ordinary activities of "at least" 12 per cent. Previously, it had indicated a target of 12 per cent, up from 10 per cent.

Simon Hales at Dresdner Kleinwort said: "We did not expect them to upgrade their forecast again."

INBEV RESULTS: NOT STELLAR

INBEV, maker of Stella Artois, Beck's and Brahma beers, has become the latest big brewer to suffer a deterioration in UK trading, saying sales volumes fell 10.8 per cent last year.

The Belgian group, which also owns the Staropramen brand, reported a 4.4 per cent drop in the previous year. The figure is also worse than the 8.3 per cent reported for the first nine months of 2007.

InBev's UK president, Stuart MacFarlane, blamed the English pub smoking ban, the washout summer and a general premium beer market decline of 7.5 per cent for the latest disappointment.

He said: "It's been another tough year for the beer business in the UK – the worst in 30 years according to the British Beer and Pub Association – and despite having some of the best beer brands available in this country, it's been another tough year for us."

MacFarlane added that he was confident this year would see the UK business "turn a corner", especially in terms of market share.

Dutch brewer this month Grolsch reported a sales volume drop of 10 per cent in the UK last year. Scottish & Newcastle recently posted a 7.8 per cent decline in its UK operating profits as the overall beer market fell by 3.9 per cent.